SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Dec. 31, 2020

Revenue Recognition: The components of revenues by solution which reflect a disaggregation of revenue by contract type are as follows (dollar amounts in thousands):


	Three-Months Ended December 31,
	2020		% Total		2019		% Total
REVENUES BY SOLUTION:
Mailbacks	$	10,452	61.4	%	$	8,564	58.8	%
Route-based pickup services	3,491		20.5	%	2,480		17.0	%
Unused medications	1,713		10.1	%	2,321		15.9	%
Third party treatment services	179		1.1	%	66		0.5	%
Other (1)	1,176		6.9	%	1,134		7.8	%
Total revenues	$	17,011	100.0	%	$	14,565	100.0	%

	Six-Months Ended December 31,
	2020		% Total		2019		% Total
REVENUES BY SOLUTION:
Mailbacks	$	16,614	55.2	%	$	15,681	55.7	%
Route-based pickup services	6,647		22.0	%	5,137		18.2	%
Unused medications	4,074		13.5	%	4,704		16.7	%
Third party treatment services	314		1.0	%	85		0.3	%
Other (1)	2,513		8.3	%	2,557		9.1	%
Total revenues	$	30,162	100.0	%	$	28,164	100.0	%

(1)The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items with single performance obligations.

Vendor Managed Inventory ("VMI") - The VMI program includes terms that meet the “bill and hold” criteria and as such are recognized when the order is placed, title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse for the customer. During the three and six months ended December 31, 2020, the Company recorded billings from inventory builds that are held in VMI under these service agreements of $2.5 million and $3.5 million, respectively. During the three and six months ended December 31, 2019, the Company recorded billings from inventory builds that are held in VMI under these service agreements of $1.9 million and $2.4 million, respectively. As of December 31, 2020 and June 30, 2020, $4.6 million and $2.8 million, respectively, of solutions sold through that date were held in vendor managed inventory pending fulfillment or shipment to patients of pharmaceutical manufacturers who offer these solutions to patients in an ongoing patient support program.

The contract asset is related to VMI service agreements within the maibacks contract type category when the revenue recognition exceeds the amount of consideration the Company was entitled to at the point in time of satisfying the performance obligation associated with the sale of the compliance and container system. The contract liability is related to the mailbacks and unused medications contract type categories in which cash consideration exceeds the transaction price allocated to completed performance obligations. The amount recognized during the six months ended December 31, 2020 related to contract liabilities recorded as of June 30, 2020 was $2.1 million.

Income Taxes: Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of valuation allowances requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. The Company has historically recorded a valuation allowance to reduce its deferred tax assets to an amount that is more likely than not to be realized. However, during the year ended June 30, 2020, the Company released the full amount of the valuation

allowance against its deferred tax assets on the basis of the Company's reassessment of the recoverability of its deferred tax assets.

Accounts Receivable: Accounts receivable consist primarily of amounts due to the Company from normal business activities. Accounts receivable balances are determined to be delinquent when the amount is past due based on the contractual terms with the customer. The Company maintains an allowance for doubtful accounts to reflect the likelihood of not collecting certain accounts receivable based on past collection history and specific risks identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. The Company has a history of minimal uncollectible accounts.

Goodwill and Other Identifiable Intangible Assets: Finite-lived intangible assets are amortized over their respective estimated useful lives and evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Goodwill is assessed for impairment at least annually. The Company generally performs its annual goodwill impairment analysis using a quantitative approach. The quantitative goodwill impairment test identifies the existence of potential impairment by comparing the fair value of its single reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess. The impairment charge recognized is limited to the amount of goodwill present in the single reporting unit. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge. The Company performs its annual impairment assessment of goodwill during the fourth quarter of each fiscal year. The Company determined that there was no impairment during the prior year ended June 30, 2020 and there have been no triggering events since that date that would warrant further impairment testing.